bot workshop 6 1 09 final

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The Florida International University

Board of Trustees Budget Workshop

Operating Budget FY 09-10June 1, 2009

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AGENDA

E&G Budget Assumptions FY09-10 (Maidique/Martinez) Legislative Update Gap Analysis

E&G Budget Rolling Reduction Plans (Wartzok/Miller) Budget Cut Methodology Rolling Three Year Budget Reduction Plans

College of Medicine Update (Maidique)

Non-E&G Funds Budget FY09-10 (Miller)

Construction Plan (Maidique)

THE FLORIDA INTERNATIONAL UNIVERSITYBoard of Trustees

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AGENDA







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LEGISLATIVE BUDGET UPDATE

General Revenue net 15% reduction

$27.2M recurring reduction after offset of $1.2M non recurring

Lotto funds reduction of $2.5M - uncertainty about future collections

PECO funding reduced by $31.2M over last year

Courtelis Facility and Challenge Grants matching will not be funded

Funding Enhancements

Tuition increase of 8% for undergraduate

Undergraduate differential tuition up to 7% additional

College of Medicine 100% funded

$10.9M additional recurring funds

$0.9M one time Federal Stabilization funds

Additional ONE TIME funding from Federal Stabilization fund $14M

Excluded from 2% state employee salary cut

RESULT : CONTINUE WITH BUDGET REDUCTION PLANS

Unfavorable Impacts

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RESTRICTIONS ON STABILIZATION FUNDSFederal Guidelines

* The list of prohibitions is not meant to be all-inclusive; uses and prohibitions are also subject to ARRA (American Recovery and Reinvestment Act) and other applicable requirements.

Education and General expenditures Modernization, renovation, or repair of instructional, research, or

student housing facilities

Source: Guidance on the State Fiscal Stabilization Fund Program, U.S. Department of Education Washington, D.C. 20202, April 2009 (Page 26-30)

PossibleUses

Prohibitions *

Strategically directed to strengthen FIU going forwardon non recurring critical investments

One Time Funds As Temporary Bridge

Endowments Maintenance of systems, equipment, or facilities Maintenance costs, new construction, modernization of athletic

facilities or religious facilities Restoring or supplementing a "rainy day" fund

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STABILIZATION FUNDS

Non Recurring Critical Investments

ComplianceResearch &

Graduate EducationStudent &

University SupportGreen Efficiency

Initiatives

Example: Research Start-up

Funds

Example: Strengthen library

resources & infrastructure

Example: Strengthen Environmental

Health & Safety

Example: Modernize low efficiency

buildings

MULTI-YEAR OPERATING GAP

(Cumulative amounts)

* FY 09-10 State Cut assumes current cut of $30.4M in GR and Lotto appropriations plus a contingency of $3.9M for possible future reductions. Incremental funding received for new space ($1.5M)and insurance increases ($2.3M) that are directly allocated to the units were excluded** Assumes 8% tuition increase in undergrad, 10% increase in grad, 15% increase in law and 7.6% increase in undergraduate differential tuition (net of 30% need-based Financial Aid allocation)*** Includes carry forward funds and salary float

STATE CUTS

TUITION UNFUNDED

OPERATIONS/OBLIGATIONS

CRITICAL INVESTMENTS

UNIVERSITY MITIGATION

*** NET GAP

UNITS' CUTS 08-09 plan

ADDITIONAL

CUTS

FY 08-09

($13.0) $6.1 ($12.0) ($11.0) $14.9 ($15.0) $15.0

FY 09-10*

($47.3) $18.5 **

($20.6) ($17.4) $32.2 ($34.7) $23.2 $11.4

FY10-11

($51.7) $30.2 ($24.5) ($21.7) $19.0 ($48.7) $35.7 $13.0

FY11-12

($51.7) $43.9 ($26.5) ($29.8) $10.8 ($53.3) $35.7 $17.6

State Cuts are in addition to an $11.3M cut received in FY07-08, which resulted in units’ cuts of $8.1M

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Continued focus on managing undergraduate enrollment while increasing graduate enrollment

FTE24,084

FTE 24,392

FTE 24,758 366, 1.5%

(93), -1%

242, 2%

170, 5%

47, 8%

ENROLLMENT BUDGET ASSUMPTIONSFY09-10

E & G INCREMENTAL REVENUEFY09-10

Net tuition revenue increase of $12.4M (volume and price)* helps make critical investments to close the on-going Budget Gap

$107.1M $109.4M$112.7M

$125.2M

FTE24,637

FTE24,084

FTE24,392

FTE24,758

*Includes the effects of enrollment growth. Revenue amounts are net of Financial Aid and waivers. Excludes College of Medicine Tuition.

Undergrad $5.3M

Grad $3.5M Law $1.0M

Differential $2.6M

$12.4M

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CRITICAL INVESTMENTSFY09-10

Despite financial crisis, FIU continues to invest in quality$17.4M*

Employees

Retain employees

Attract talent

Maintain stability

Teaching

Advisory services

Faculty hiring

Graduate Assistant stipends

Classroom renovations

On-line infrastructure

Improve quality

Increase graduation and retention rates

Research

Faculty hiring and start up funds

Graduate Assistant stipends

Strengthen national research ranking

Increase revenue

*Cumulative investment amount through FY09-10

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AGENDA







BUDGET REDUCTIONPlanning Methodology

Multi-year state budget cuts expected

Continue making investments in critical strategic areas

Stabilization funds directed towards one time critical investments

Lessen immediate impact to students, faculty and staff through the use of one time funds

Shared savings from new & replacement positions

Savings and revenues from new university-wide ideas

Units’ Reductions

Three Year Rolling Plans

University Mitigation

Reduction amounts allocated proportionately to executive areas

Reductions distributed to each unit based on strategic prioritization

All units created their own three year plans for submission

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MULTI-YEAR OPERATING GAP

* FY 09-10 State Cut assumes current cut of $30.4M in GR and Lotto appropriations plus a contingency of $3.9M for possible future reductions. Incremental funding received for new space ($1.5M)and insurance increases ($2.3M) that are directly allocated to the units were excluded** Assumes 8% tuition increase in undergrad, 10% increase in grad, 15% increase in law and 7.6% increase in undergraduate differential tuition (net of 30% need-based Financial Aid allocation)*** Includes carry forward funds and salary float

STATE CUTS TUITION UNFUNDED

OPERATIONS/OBLIGATIONS

CRITICAL INVESTMENTS

UNIVERSITY MITIGATION

*** NET GAP

UNITS' CUTS 08-09 plan

ADDITIONAL

CUTS

FY 08-09

($13.0) $6.1 ($12.0) ($11.0) $14.9 ($15.0) $15.0

FY 09-10*

($47.3) $18.5 **

($20.6) ($17.4) $32.2 ($34.7) $23.2 $11.4

FY10-11

($51.7) $30.2 ($24.5) ($21.7) $19.0 ($48.7) $35.7 $13.0

FY11-12

($51.7) $43.9 ($26.5) ($29.8) $10.8 ($53.3) $35.7 $17.6

(Cumulative amounts)

State Cuts are in addition to an $11.3M cut received in FY 07-08, which resulted in units’ cuts of $8.1M

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UNIVERSTIY WIDE REDUCTION PLANS FY08-09 Plan Summary

Incremental Revenue

Initial 3 Year PlanReduces Budget by $35.7M

Allocation to Appropriate Funding

Operational Efficiency

Academic Restructure

Expand Graduate Tuition Plus

Expand Self Supporting Programs

Increase Private Support for Museum Operations

Reconfirm E&G funds not used to cover expenses of other funds such as Contracts & Grants, Construction, and Auxiliaries.

Lower operational costs: (revise processes, redefine service model, renegotiate vendor agreements, create partnerships, leverage purchasing)

Consolidate operations: increase internal shared services

Reduce non-critical support services

Curriculum changes

Degree program closures based on sustainability criteria

Center & Institute closure and reductions based on approved policy

Generates $2.8MSaves $13.9MSaves $6.9MSaves $12.1M

ACADEMIC AFFAIRS GROUP STRUCTUREFY09-10 Incremental Reduction Plan

Strategic to FIU

Return on Investment

Cost

Faculty Investment

PhD Production

Criteria Relative Importance / Definition

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7

5

3

2

As defined in FIU strategic plan

Total of all funding divided by E&G support – tuition, research, gifts, and auxiliaries

College level analysis using Delaware study benchmark

Faculty cost plus startup dollars expectation

Three year average PhDs awarded divided by Tenure-Tenure track faculty

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ACADEMIC AFFAIRS BUDGET REDUCTION PLANFY09-10 Incremental Reduction Plan

Group 1 (overall score > 60) 3.3% 3.6% 5.0% Arts & Sciences (64), Business (61), Engineering &Computer Sciences (64), Public Health & Social Work (66)

Group 2 (overall score 40 – 59) 4.1% 4.6% 6.2%Hospitality (54), Nursing & Health Sciences (54),Education (49)

Group 3 (overall score < 39) 5.1% 5.6% 7.7%Architecture & the Arts (38), Journalism (37), Law (38)

Group 4 (overall score not applicable) 5.3% 5.9% 8.0%Library, Honors, Museums, Student Affairs andall other Provost areas

ADDITIONAL BUDGET REDUCTION PLAN

Cumulative Percentages

09-10 10-11 11-12

Reductions for planning purposes, subject to change

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Shift to Other Funding/Revenue Sources

Incremental Multifaceted 3 Year Plan to Reduce Budget by $13.7M

ACADEMIC AFFAIRS CUT STRATEGIESFY09-10 Incremental Reduction Plan

Lower Operational Costs

Private support for museum operations

Reallocate operating expenses to grants, overhead and fees

Reallocate operating expenses to auxiliary funds where appropriate

Consolidate or reduce administrative functions – Eliminating Continuing and Professional Studies; 4 Vice Provost positions

Consolidate six departments into three

Reduce library purchases, reduce travel, service hours in enrollment services, convert print materials to library on line access, computer replacements, marketing in select programs, recruitment events, permanent and temporary staff

Change instructional mix of summer courses, decreased use of adjuncts by increasing class size, and eliminate faculty through vacancy/attrition

Saves $3.4MImpacts 66 Positions: Saves $9.3M

Attrition 25, Vacancy 19, Elimination 22 17

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Incremental Multifaceted 3 Year Plan to Reduce Budget by $13.7M

Degree Program Closure

ACADEMIC AFFAIRS CUT STRATEGIESFY 09-10 Incremental Reduction Plan

Education Arts & SciencesRecreation &Sports Management ( B-62, M-19) Religious Studies (B-87,M-33) English Ed MAT (M-6) Mathematical Sciences (B-24)French Ed (B-0)French Ed MAT (M-2)Mathematics Ed MAT (M-4) Nursing & Health SciencesScience Ed MAT (M-2) Athletic Training (M-25) Social Studies Ed MAT (M-5) Occupational Therapy (B-0) Spanish Ed (B-0) Physical Therapy (M-0)Spanish Ed MAT (M-0)*Adult Education (M-9)*Adult Education & Human Resource Development (D-27)*Higher Education Administration (M-82,D-53)*International Education (M-19)*Urban Education (M-11)

Impacts 20 positions: Saves $1MElimination 20

Bold text = Faculty Senate opposition to closureNormal text = agreement by the Faculty Senate with the proposalItalicized text = administrative agreement with Faculty Senate recommendationsDegree level: B – Bachelor ; M – Master; D - Doctorate

*Degrees will be subsumed under existing degree program

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NON- ACADEMIC AFFAIRS OPERATIONSFY09-10 Incremental Reduction Plan

Budget of $83M, or 24% of Total E&G Budget

Implications:

Utilities account for 17% of total budget

Another 18% is contractually committed or infrastructure specific and cannot be immediately reduced

Therefore, significant savings must be absorbed from Personnel, OPS and Other Expenses and Other Support Areas

*Other Support Areas include Advancement, External Relations, Govt. Relations, Presidents Office and General Counsel

NON-ACADEMIC AFFAIRS OPERATIONS*FY09-10 Incremental Reduction Plan

Incremental Planned Cuts

Prioritization

Planned cuts range from 1% to 7% by FY 2011-12

Group 4 cuts could exceed 35%

$3.9M in additional cuts

55 Positions: 7 Attrition, 21 Vacancy, 19 Eliminated** and 8 Reassigned

*Includes Finance & Administration, Advancement, Community Relations, General Counsel, Government Relations, BOT Office, President’s Office** Includes 2 replacement positions in HR

Group 1: Compliance and University-Wide Strategic ProjectsExamples: Equal Opportunity Program, IT Security, BioChemical Receiving

Group 2: Essential Services where service will be reduced or contractual commitments renegotiated

Examples: IT Support Center, Media Technology Services, PeopleSoft

Group 3: Areas where efficiencies gained from a change in current business processes or in customer service delivery method

Examples: Purchasing Services, Student Payment Services (Online)

Group 4: Less Essential Services where current levels cannot be affordedExample: Groundskeeping

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PERSONNEL IMPACTE&G Reduction Plans Through 2012

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FY08-09 FY09-10 FY10-11 FY11-12

Attrition 27 65 80 84

Vacancy 26 87 134 157

Elimination 43 52 65 76

Shift to Non-E&G Funding Sources

29 94 99 100

Total Position Reduction

125 298 378 417

Faculty 36 91 123 140

Non-Faculty 89 207 255 277

Total Position Reduction

125 298 378 417

Cumulative FTE

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AGENDA







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COLLEGE OF MEDICINEFY09-10 Update

Faculty & Students

Affiliations

State Funds/Gifts/Grants

Faculty Practice Plan

130 faculty on board, 14 of 15 chairs identified 1st and 2nd year curriculum completed 43 students accepted from 3,332 applicants Students begin orientation August 3, 2009 Provisional accreditation obtained in record time

Agreements in place with: Jackson Public Health Trust Leon Medical Centers Mercy Hospital Miami Children’s Hospital Mount Sinai Medical Center

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State funds increase of 100% to $22M Over $53M in donations to date; $14M expected in FY09-10 $10M gift from Benjamin Leon Jr. and Family $10M gift from Miami-Dade County for an ambulatory facility $2.4M in new and transferred grant awards $2.7M in Stimulus related applications as of April 2009

Starting Faculty/Staff clinic on University Park campus

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AGENDA







Activity & Service, $12M,

2% Athletics, $19M, 3%

Technology Fee, $6M, 1%

Scholarships, $88M, 12%Sponsored

Research, $89M, 13%

Auxiliary Enterprises, $107M, 15%

DSO's, $13M, 2%Fiscal Stabilization Funds, $15M, 2%E&G Tuition,

$126M, 18%

E&G State Funds, $219M, 31%

FIU UNIVERSITY BUDGETFY09-10 Expenditures

OPERATING BUDGET$685M*

* Net of interfund adjustments, includes College of Medicine25

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ACTIVITY & SERVICEFY09-10 Budget

Fee is charged equally to all levels of students to fund student life

70% supports student programs and infrastructure like Graham and Wolfe Centers

30% supports student activities and groups

Renovations in Graham Center and Wolfe University Center and UP Recreation Center

Additional operations for BBC Pool

Increase allocations of funds for student groups and affinity programs

Recommended fee increase of $1.08/credit hour brings total fee to $11.60/credit hour

Incremental Fee Uses

Allocation

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ATHLETICS ENTERPRISEFY09-10 Budget

Net loss of $1.6M in FY08-09 covered by reserve balance

Net loss expected to be at the same level in FY09-10 using majority of the reserve balance

Athletics Operation

Athletics Finance Corp

Risk of breach on debt covenant if revenue generation from special event sales, stadium naming rights and sponsorships do not materialize

Major League Soccer contract will not materialize adding additional pressure on other revenue sources

Construction nearing completion

Academic use approved by BOG allowing for matching of donor gift

Bridge financing still pending

Field House

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Non-Need Based Activity

Need Based Activity

FINANCIAL AID SCHOLARSHIPSFY09-10 Budget

Need-based Scholarships projected to increase $8.0M

Pell grant maximum award increased by $619 per student to $5,350

Differential Tuition allocation of 30% to Need Based Aid

Non Need-based Scholarships projected to increase $5.3M

An increase in the number of students receiving Bright Futures

Additional funds allocated toward Athletic Scholarships

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Operations

SPONSORED RESEARCHFY09-10 Budget

Revenues to increase by $4.1M to $90M ($110M)* Increase in number of awards received in FY08-

09 Impact of Federal stimulus awards which are

required to be spent within 18 months of receipt

Higher indirect cost rate Growing from 42% to 44% Effective rate will increase by 2% to 20%,

targeting industry benchmark of 50% of the federal rate

Grants Module implementation to be completed July 2009

Investments

* National Science Foundation survey of research and development expenditures is projected at $110M

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AUXILIARY ENTERPRISESFY09-10 Budget

In $

Mil

lio

ns

Actuals 06-07 Actuals 07-08 Forecast 08-09 Budget 09-1070

80

90

100

110

120

130

$107$111

$118 $120

$87

$100$105

$116

RevenueLinear (Revenue)

$11 M

Investments Expansion of Parking garages -

$2M Replacement of obsolete network

infrastructure - $2M Housing capital improvements

$0.7M

Increasing cost of operations (filling vacant positions and Utilities costs) - $2M

Realignment of E&G expenses - $3M

Revenues remain relatively flat in FY09-10 while expenses increase to absorb investments and

properly align costs

Note: Expenses include debt service

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TREASURY OPERATIONSFY09-10 Budget

Cash & Short Term

Securi-ties,

104.1, 50%

Fixed In-come,

61.8, 30%

Equity, 18.6, 9%

Alternatives, 23.1, 11%

FIU Portfolio - April 2009Portfolio Performance FY

Since Inception

FY 05-06 3.3% 3.3%

FY 06-07 7.3% 6.3%

FY 07-08 2.3% 4.5%

FY 08-09(thru 4/30) (4.2%) 1.8%

FY 09-10(Budget) 4.0% ---

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FIU FOUNDATION FY09-10 BUDGET

Endowments $4M (15%)

Scholarships & Programs Non-Endowed $4M

(15%)

Building Funds $0.2M (1%)

Pledged Revenue $11M

(41%)

MARC Building Rental Income

$1M (5%)

Investment Returns $5M

(15%)

Annual Fund $0.4M (1%)

Admnistrative Fee

$1M (1%)

Highlights:

Endowed and Non-endowment Scholarship & Program revenues are forecasted to be $8M for new gift agreements and expected pledge payments. Reduction due to delay of State Match for Courtelis program expected in future years.

Investment returns based on 5% return on $95M

Pledged revenues totaling $11M included committed contracts of $18M net of 25% allowance and $7M in anticipated payments.

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AGENDA







FIU UNIVERSITY BUDGETFY09-10 Construction Plan

Major construction projects in progress:

Nursing & Allied Health (Molecular Biology)

Satellite Chiller Plant Social Science Building (International

Studies) Parking Garage V / Public Safety

Building Science Classroom Complex Graduate Classroom/Research Building International Hurricane Research Center Field House

Construction Funds $249M

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Total University Budget $934M

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UNFUNDED MATCH TO DATE

Facilities $1.2

Endowment $9.0

New Funds (FY 08-09) $4.9

TOTAL $15.1

AMOUNT IN MILLIONS

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AGENDA







bot workshop 6 1 09 final

Economy & Finance